Impacts of technology on the economy

1. Implications of nanotechnology on Industrial and Corporate Dynamics – Lessons from Economics of InnovationJens Frøslev ChristensenCopenhagen Business School

2. Impacts of technology on the economy • R&D is generally associated with economic growth and rise in productivity. • Some general-purpose technologies (i.e. the steam engine, the electric motor, ICT) have had significant impacts. • These impacts only materialize in the mature stages of the technology – 30-50 (or more) years after the early breakthroughs • Biotechnology has not yet demonstrated any significant impact – and even less so nanotechnology.

3. Techno-economic paradigms and long waves in the economy Technical/org. innovations Examples of visible innovations Carrier industries Core input Managerial/ organizationa changes Timing of upswing and downswing Steam-powered mechanization of industry Liverpool-Manchester railroad (1784) Railways Steam-engines Machine tools Iron Coal Joint stock companies Subcontracting 1848-1873 1873-1895 Electrification of industry and society Edison’s New York electric power station (1882) Electrical equip. Heavy engin. and chemicals Steel Copper Metal alloys ’Taylorism’ Giant firms 1895-1918 1918-1940 Motorization of transport, civil economy and war Ford’s Highland Park car assembly line (1913) Automobiles Diesel engines Aircrafts Refineries Oil Gas Synthetic materials ’Fordism’ Hierarchies 1941-1973 1973- Computeri-zation of entire economy IBM 360 series (1960s) and Intel micro-processor(1972) Computers Software Telecom Integrated circuits Networks; internal, local, and global ?? Source: Freeman and Loucã, 2001

4. Sequences of Economic Impacts from a technological Revolution • Long gestation time without significant impact • Then a spurt of growth, productivity and demand in a few core industries – with some impact on aggregate economy • Finally, sustainable growth of the economy as a whole – requires changes in a) national/regional social and institutional context, and in b) institutional conditions to sustain worldwide diffusion (No linear determinism!)

5. The expanding global science-technology base Expanding scope of technological opportunities Increasing number of technical fields (differentiation, merging) Increasing depth/funding pr technical field (specialization)

6. Nanotechnology:an emergent science-technology paradigm • Something is happening. Empirical indicators • What kind of Science? • What kind of technology? • What kind of science-technology nexus? • The global race for nanotechnology • The industrial dynamics of nanotechnology • Propositions for future implications

7. Public funding in nanotechnology R&D FP6 (EU) EU NNI (USA) Japan USA Others • Public expenditure in nanotechnology is growing by ~40% annually to around 3.5 billion €/$ in 2003. Public expenditure ( 1M€ = 1M$ ) Source: European Commission (2003) NNI: National Nanotechlogy Initiative. FP6: The 6. EU Frame Program

8. Nanotechnology science notations 1990 –2002 Source: A database of citations provided by ISI Citation Index tracks all references to key words (“nano” references) in peer-reviewed English language scientific publications. Source: ETC group, january 2003

9. Nanotechnology patents Source: VDI Technologiezentrum GmbH and Bundesministerium für Bildung und Forschung, September 2004

10. Examples of current nano-products Source: TDO, 2003

11. Prospects for the future Car Source: AtomWorks, 2003

12. What kind of technology is Nanotechnology General-Purpose rather than Narrow-purpose Inter-disciplinary rather than One distinctive discipline Complementing rather than Substituting Platform technology not One distinctive technology

13. Consideration of use? No Yes Quest for fundamental understanding? Yes No Pure basic research (Bohr) Use-inspired basic research (Pasteur) Pure applied research (Edison) What kind of science is nano-science? Much (most?) research - Wissenshaft Source: Stokes, 1997

14. What is the science-technology nexus in nanotechnology? • Technology is science-driven - not exclusively engineering/technology-driven. But… • Technology also drives science – not exclusively invention and innovation. • Technology/industry and science engage in interactive dance (based on IP incentives and market visions)

15. The Global Race for Nanotechnology - The new thrust after landing of the New Economy • USA (again) took the lead and set the agenda (NNI in 2000) • Germany and Japan envision prospects for techno-economic renaissance • Korea and China see opportunities to become the new technological tigers? • The poor world is left behind

16. Worldwide spendings on nanotechnology research and development • Governments, corporations, and venture capitalists will spend nearly $9 billion worldwide on nanotechnology research and development (R&D) in 2004. • • National and local governments across the world will invest close to $5 billion in nanotechnology R&D in 2004 (35% in the US, 35% in Asia, 28% in Europe, and 2% in rest of the world). • Established corporations will spend about $4 billion globally on nanotechnology R&D in 2004 (46% by US firms, 36% by Asian firms, 17% by European firms, less than 1% by companies in rest of world). Source: Lux Research, 2004

17. Worldwide Public Expenditures in Nanotechnology R&D 2003 Public expenditure ( 1M€ = 1M$ ) Source: European Commission (2003)

18. Government Investment in European Nanotechnology R&D, 2003 Public expenditure ( M € ) Source: European Commission (2003)

19. Public Funding of Nanotechnology R&D outside Europe, Japan and the US Public expenditure ( M$ ) • Note that the purchasing power can vary widely Source: European Commission (2003)

20. Leading countries within nanotechnology, based on patenting activity.(including patents from 2002, 2003 and 2004) Source: VDI Technologiezentrum GmbH and Bundesministerium für Bildung und Forschung, September 2004

21. Opportunities and constraints in corporate technology strategy Constant corporate R&D funding Pressures for expanding the technology base Number of technical fields Depth/funding pr technical field (specialization)

22. Marginal fields Niche / emerging fields Background fields Core fields Types of R&D in large multi-technology corporations Technology Strength Nano entry Low High Current importance / Level of R&D Low High Inspired by Granstrand, Patel and Pavitt, 1997

23. Research Stock of Knowledge Potental market Chain-Linked Model of Innovation Distribu-tion and marketing Detailed design and test Invention and analytical design Redesign and produktion Source: Kline and Rosenberg, 1986

24. The scope for Nanotechnology in corporate R&D • Multi-technology companies (large incumbents): domain- and application specific and synergistic R&D improving cost and performance in existing product markets. • Dedicated nanotechnology firms. Will we see a replication of DBFs in biotech?

25. Major US Corporations in Nanotechnology Source: NanoBusiness Alliance, 2003

26. Propositions/questions • Nanotechnology will/may be absorped by existing/new disciplines. • Enormous challenge for commercialization: The integration of nano-dimensions into domain-specific application areas in myriads of industries and technologies. • Large incumbents will/may take a lead in this process • Dedicated nanotechnology firms (DNFs) will play a smaller role as ”intermediaries” than the DBFs in biotech.

27. Chris Freeman (2001) Euphoric ideas about a ’new economy’ have a rebirth with each great technological revolution. While there is some justification for such ideas in relation to technology, there is less justification for underestimation of the economic turmoil accompanying these changes.

28. Cognitive Presbyopia? Cognitive presbyopia leads to hypes. Seeing the distant future with a clear focus, while seing the intervening events in a hazy or indistinct manner. • Technology history is replete with examples of technologies • whose eventual use and value were • enormously different from the ideas of their inventors or those • who were the first to apply them commercially, and/or • 2) much slower to materialize than originally envisioned

29. Types of Technology polcies • Mission oriented: strong positions at the cutting edge of science and technology • Diffusion oriented: focus on effective absorptive capacity for absorbing and widely diffusing new technology • Application/domain oriented: Focus on particular domains of social and environmental relevance.

30. Primary sources • Cientifica, 2003. The Nanotechnology Opportunity Report, 2nd Edition, Executive Summary. • NSF 2003. Government Nanotechnology Funding: An International Outlook. • Etc Group, 2003. The Big Down. • CMP Científica, 2002. Nanotechnology: The Tiny Revolution. • Bundesministerium für Bildung und Forschung, 2004. Nanotechnologie als wirtschaftlicher Wachstumsmarkt. Innovations- und Technikanalyse. • The National Science and Technology Council, 2004. National Nanotechnology Initiative – strategic plan. • Lux Research Inc., 2004. The Nanotech Report 2004. • European Commission, 2004. Towards a European Strategy for Nanotechnology. • National Nanotechnology Initiative: http://nano.gov EU Nanotechnology homepage: http://www.cordis.lu/nanotechnology/

31. Supplementary statistics

32. Nanotechnology patents within chemistry Source: VDI Technologiezentrum GmbH and Bundesministerium für Bildung und Forschung, September 2004

33. Nanotechnology patents within optics Source: VDI Technologiezentrum GmbH and Bundesministerium für Bildung und Forschung, September 2004

34. Nanotechnology patents within automotives Source: VDI Technologiezentrum GmbH and Bundesministerium für Bildung und Forschung, September 2004

35. Who is patenting? Source: ETC group , 2003

36. Top 10 Nanobiotechnology Companies Ranked by Amount of Venture Capital Raised, 2003 Source: ETC Group, 2003

37. Top 15 performers in per capita public funding of nanotechnology R&D 2003 Public expenditure ( € or $ / per capita ) Source: European Commission (2003)